Leadership Studio

Organizational Change Management is a very challenging undertaking. Most people are not comfortable with change, so this can be a frightening and uncertain experience for them, especially during and after a merger or acquisition, which is what typically engenders an organization-wide change. It is even more scary when they are not kept in the loop or changes are filtered down from upper management outlining all the organizational levers that need to be pulled to implement the desired change. This is referred to as the "organization in" approach. This method breeds resistance, resentment and fear. I am a believer in the "individual out" approach. Like anything else, from project management to field marketing, if you want supportive and excited participants, you need to get buy-in. This brings me to my two keys to successful change management: Communication and Integration.

Communication

As most people know, communication is the transference of meaning. What many people forget is that for communication to be effective, the meaning must also be understood. Without that, the process is meaningless. Communication serves four basic functions that have the potential to be lost if the process is broken: control, motivation, emotional expression and information.

Control - It serves to control behavior through both formal and informal processes and policies.

Motivation - It provides team members with clarification on how well they are doing, and what can be done to improve performance. The formulation of goals and feedback are prime examples of this.

Emotional Expression - For many people, their work team is where they get their social interaction. Communication provides an avenue for venting of frustration or peer validation.

Information - It provides individuals with the information they need to move forward, evaluating possibilities and making decisions.

There are three methods of organizational communication that are common: formal networks, the grapevine and electronic methods. The grapevine is noteworthy in that 75% of employees hear about matters through the grapevine first and that the grapevine is more active when situations are important to team members, where there is ambiguity and where there is anxiety. It is also important to note that while most people find the grapevine more reliable and believable, less than 10% of team leaders act as a liaison and pass down information to their teams.
Most managers do not leverage the grapevine and that is a mistake. Managers can use it to convey information quickly, test out decisions prior to the oimplementation, and get valuable feedback. Of course, managers should also use formal channels to provide relevant accurate information, but the grapevine should be a tool in any manager's toolbox.
Managers should be aware of where kinks will arise in the communication process, as well. Distortion of meaning can occur when the originator intentionally filters information so it appears more favorable. The receiver of the information may have a preconceived idea around it which will result in selective perception. Too much information can result in poor communication just like to little - people will weed out or ignore information when they are getting too much. Finally, gender plays a role. Men and women often share information for different reasons. For instance, a woman may speak to an issue she is having. She wants empathy, confirmation or support while the man sees her asking for a solution.
In the end, clarity is key. Have a clear vision of where the organization is headed and provide clear communication around that. The communication should consistently reinforce the vision and be consistent in the messaging. Limit ambiguity and provide a timeline for when future communications will be coming out or big changes taking place. This will help minimize speculation and keep employees focused on the business.

Integration

In many cases the first thing that happens during a merger or acquisition is the replacement of top management by the more powerful or acquiring company. According to The Wharton School's Creating Value in Post-Acquisition Integration Processes the replacement of leadership has a negative impact on performance. Any improvements they may offer is offset by the disruptions in processes, routines and personal motivation that a change in leadership inevitably causes.

Integration of teams, on the other hand, improves or maintains productivity, usually offsetting any hidden costs and disruptions that may result from this more complete integration. Experience also plays a part in the success of an organizational change.

The higher the degree of experience is, the more likely it is to play a part in a successful integration of teams or efforts resulting in lower costs, few replicated mistakes and a better employee experience. Experience comes in two types: having done an acquisition or merger before and in the similarity of homogenous acquisitions.

This allows for leveraging learning from previous acquisitions and the codification of that learning for use in future acquisitions through the use of already-created support systems, manuals, and tools. Wharton shows the selection of convergence strategy by the average bank will improve the bank’s net earnings by $145.4MM over a three-year period, post-acquisition.

Implementation of a combination of high integration and high codification of another acquirer, which had ten in-market acquisitions resulted in a competitive value of $129.6MM over a three-year period, post acquisition.

Impacts

What does all this tell us? It tells us that post-acquisition strategies determine the value creation. Simply coming in and taking over a company, as opposed to effectively integrating it, is likely to cost more and have a higher failure rate. Failure can be defined as everything from loss of customer satisfaction to the more concrete measurement of negative balance sheet impacts.

Experience is wonderful to have, but not effective on its own. Only when it is combined with codification of learnings which are applied to the current acquisition or merger will it be cost-effective and create a strong system of integration, which will result in higher overall employee satisfaction and buy-in.

In the end, it’s not what you buy – it’s what you do with it after you buy it that determines success and failure.

"Why a coaching culture?", you may ask. Recent research indicates that coaching cultures create a multitude of benefits including improved employee engagement, job satisfaction, morale, collaboration and teamwork. This indicates that assisting leaders and their teams in developing coaching skills and weaving them into the overall management strategy, not just Human Resources, can reap rich rewards. After all, it's a well-know fact that companies with more satisfied employees are more successful.

Strategies

Seed the organization with leaders and managers who can role model coaching approaches.

Note the use of the word "seed" above. This is critical to this strategy. In a large organization, it wouldn't make financial sense to train all the employees in coaching behaviors. It would be cost and time prohibitive. The key is to train select leaders and managers in coaching behavior and have that waterfall through the organization. This ensures maximum return on investment and leverages scale to the best advantage.

Link coaching outcomes to the business.

It's been proven time and again that when undertakings are viewed as business initiatives and presented in such a way as to link them to the business goals, they are more likely to receive continued support from senior leaders. These leaders are more likely to stay interested in supporting propositions if you can tie improved business outcomes to the undertaking. You might even go so far as to create KPIs for individual performance measurement. It's all about the bottom line, folks.

Coach senior leadership teams in creating culture change.

Culture change is always painful. It creates fear and uncertainty if handled incorrectly. In order to successfully create a coaching culture, which would be a culture change in most instances, senior leaders should undergo training on how to successfully implement a culture change. Teams with strong bonds, such as excellent communication and interdependent strengths are more likely to successfully implement an organizational improvement than those without.

Recognize and reward coaching-culture behaviors

This is standard positive reinforcement. You see this emphasized repeatedly in any organizational change management course, leadership seminar, or coaching class. It just makes sense. It ties directly into KPI rewards or business goal achievement. However, unlike those goals, which are typically reviewed quarterly, biannually, or annually, new behaviors should be rewarded on a more timely basis. It's the best way to show support, across the organization, of the desired behaviors.

Integrate coaching with other people-management processes

This is critical for the sustainability of the new culture. It needs to become a "business as usual" process. At the very least the new coaching behaviors should be integrated into learning and development, job competency models and team-management processes.

Any organizational change is difficult, but creating one that appears to have no hard metrics and is relatively intangible is even more difficult. There will also be cultural barriers that will need to be overcome. They may include senior leadership not exhibiting the desired behavior all the while speaking in support of it, lack of accountability, or just not knowing how to start. I've provided some ideas for how to deal with these situations in the strategies above. Just keep in mind - in the end it's worth it.

Impacts

A survey of ~350 key senior leaders (non-HR) shows they feel a coaching culture will have far-reaching benefits. 67% believe this organizational change would increase employee engage. 62% believe that increased job satisfaction and and morale will result and 58% believe a coaching culture will result in increased collaboration and teamwork.

A study by Bersin & Associates, now Bersin by Deloitte, puts it into even better perspective. Businesses that are highly effective at teaching managers and senior leaders coaching are 130% more likely to realize stronger business results and 33% more effective at engaging employees. Bersin's research showed that organizations in which senior leaders frequently coach had 21% higher business results and those with excellent support for coaching had 13% stronger business results and 39% stronger employee results. Coaching organizations clearly have better results. How can you not make the transition now?

We
all know what diversity in the workplace is, right? It’s inclusion of those whose
race, creed, color, sexual orientation, religion, etc. are different from the
homogenous norm. Hold on! It’s not quite that simple anymore, thanks to a
recent study by The Economist Intelligence Unit (EIU), which finds that
diversity is shifting to include values.Diversity
in the workplace used to be tricky enough to manage when it only included gender,
race and ethnicity. It’s becoming even more difficult as the definition changes.
Susan Galer of SAP, notes in her article, "Workplace
Diversity Has a New Meaning that diversity now includes values such as
work ethic, communication style and motivational drivers. Ideally, managers
want their diverse employees to fit in and be part of the team, accepting the
organization’s culture and norms, but without losing their individuality. Do
you see the paradox? However, if you can manage this effectively, you gain the
competitive advantage.

Over 50% point to conflicting values across a multigenerational workforce.

Forty-seven percent called out unrealistic expectations of millennial employees.

The Solutions

It’s leadership’s job to figure out what’s motivating these employees and what their expectations are. It’s not enough, anymore, to just pay them well and many executives don’t understand that. Tamara Erickson, a workforce researcher and author, says millenials are more likely to want to earn enough to support their lifestyle but not necessarily more. This doesn’t mean they’re not motivated; it just means different drivers than the ones that motivate the executives inspire them.

Moreover, if this isn’t daunting enough, the challenges faced by companies vary depending on their geographic region. A company with international locations may face language and generational challenges in Asia-Pacific, but gender issues in the Middle East. The African branch may be facing challenges of education, while the European headquarters may see diversity as a social initiative.

The Benefits

Getting strategies in place to effectively manage diversity in the workplace will result in a multitude of benefits, primary amongst them are diversifying the client base and target markets, having access to an enriched talent pool and a competitive advantage in labor markets.

It’s time for workplace leadership to recognize that it’s not enough to provide employees with a standard workplace environment with standard hours and standard benefits and require they force their round peg into the square hole or take a walk. This is a new generation, with new expectations and new motivations. Wake up and smell the diversity, folks. It’s time for you to get on board the flexibility train or watch your company derail as best talent goes somewhere that will allow their round peg to fit in a round hole.

When you look at the classic personality traits of a successful leader, they usually jibe with those of an extrovert: vocal, outgoing, smooth. The Harvard Business School works very hard at turning reticent students into outgoing students. These outgoing students graduate, step into roles as leaders and, in certain situations, fail or perform less well than their introverted counterparts do. Why is that?

The First Study

The first study analyzed data from one of the biggest pizza chains in the United States. They discovered the profits of stores run by extroverts were 16% higher than those run by introverts, but only when the store teams were passive and exercised their roles without initiative. In cases where the store employees were active in their efforts to improve processes or performance, the exact opposite was true - introverted leaders' store profits were 14% higher than the extroverts.

The Second Study

Grant's team divided 163 college students into competing teams who had to fold as many t-shirts as possible in 10 minutes. Undercover in each team were two actors: on some teams, the actors were passive and on some they worked together to suggest an improvement to the folding technique to the leader.

Again, in cases where the team members were active, the introverted leader's team performed better. The introvert leader was 20% more likely to take the suggestion, and their teams had 24% better results than the extroverted leaders'. When the teams were passive, those led by extroverts did 22% better than those led by introverts.

The Conclusion

Introverts are uniquely capable of taking advantage of proactive teams. Their inclination to listen to others and not take charge of social situations puts them in the situation to better hear and implement suggestions. Once they have benefited from the talents of their teams, they are more likely to motivate a proactive approach. This creates a continual cycle of proactivity.

So...look at your team. Are they active or passive? My experience in the business world and the world in general, is that we have created a culture that celebrates extroverts. Who leads extroverts better? Introverts, it would seem. Though this line of study is still in its infancy, it may yet prove the value of introverts in a management capacity, and change the thinking of corporate America.

It's common for organizations today to work in teams and it's natural, when you bring individuals of varying backgrounds, goals and opinions together, for those teams to experience conflict. There are two types of conflict: dysfunctional and functional. Most people see conflict as dysfunctional and something to avoid, but really, what kind of conflict you have depends on how you handle it. I like to look on conflict as an opportunity for increased productivity, greater innovation, maximized performance, and team strengthening.

There are several steps you can take to diffuse team conflict, which will result in stronger relationships and team performance.

Set the Stage

Find a neutral location for the affected individuals to meet. I often include all members of the team when it's small because I have found there is usually spillover to the team members not directly involved with the conflict, which means they have a stake in the resolution. Also, be sure the individuals in conflict want to resolve their differences. It doesn't do anyone any good to go to all this effort if one of the parties has no interest in finding a solution. You may also want to set down some guidelines for the interactions as conflict resolution can become heated. If you don't set down any other guidelines, ensure that all parties understand that they must respect one another and the opinions voiced.

Explore the Conflict

Have each team member express his or her views on the situation. This serves dual purposes – it gets the feelings and concerns out in the open and it weakens the force of emotions behind the conflict. This allows the team members to begin to actually hear and consider what their co-workers are saying, rather than being distracted by the emotion behind the words.

Generate Solution Options

Have the team members brainstorm ideas for how to solve the conflict or reach a point of compromise. Remind them that this resolution must focus not only on the individuals involved but also be relative to the team goals and objectives. Also, keep them focused. Don't let the team members devolve into the blame game. Keep them looking forward and planning for their success. You may find several solutions offered, or only one, but either way you must get all involved parties to agree on a single best solution. Discuss the pros and cons and get everyone's buy-in. Remember, you can't make everyone happy all of the time, but you can at least get everyone to agree, although it may be begrudgingly.

Implement the Solution

Put the solution into place. This isn't the end, though. You need to evaluate the solution and ensure it's achieving the desired outcome. If it is – celebrate! If it's not, you get to call your team together, go back to step 3, and discuss the the selected solution isn't working and choose a new option.

Of course, the steps discussed here are for a long-term solution. You may be in a situation where you need to slap a bandaid on the problem until you have time to deal with it more effectively. If that's the case, I have a few thoughts on that as well.

The Quick Fixes

Acting – Simply tell the team what the solution will be and get on with the project. This is a very authoritarian approach and should only be used in times of emergency and high emotion when almost any decision will be unpopular. Remember to consider the fallout and deliver the resolution with complete confidence.

Compromising – This often involves an objective third party who hears all sides of the conflict then offers a solution that is an effective compromise. This works best when the issue is complex and a quick temporary solution is needed.

Accommodating – Sometimes one of the parties is right or has more at stake than the other or others. In that case you need to get the other individuals to see the first's point of view and convince them the appropriate thing to do is give in. This requires sacrifice, but it will be rewarded in the long run.

Avoiding – Sometimes an issue simply isn't that important, is only a symptom of a larger issue or will take care of itself over time. In that case, it's a safe option to just leave it alone, but explain to your team what you're doing and, if you plan to address it in the future, when you'll deal with the larger issue. The key decision-making factor here is to ask yourself, "What's the worst thing that will happen if I do nothing?"

Wrapping It Up

Differences cause negative emotions, which in turn, negatively affect workplace productivity. The key to defusing conflicts is open communication delivered with respect and honesty. Differences should be addressed as quickly as possible because the chasm will only widen with time. By acting quickly, you will have a lesser conflict and smaller differences to resolve. This means you can get back to the business of meeting the team and company goals more quickly.

For more information on managing team conflict please see the following links:

We spend a lot of time analyzing what makes someone a good leader. If you ask what the characteristics are, you'll get numerous answers: vision, charisma, knowledge, etc. We focus on what makes leaders great, but fail to take into consideration why people follow them. I ran across some numbers from Gallup Polls conducted from 2005-2008 which focused on why people follow. Contrary to what you would expect, based on experts' research into people historically considered leaders, many of the defined characteristics never even registered for the followers. When asked what they needed from the leaders in their lives, these followers stated the following four characteristics: trust, compassion, stability and hope.

Trust - Your Word is Your Bond

If we look back on presidents, CEOs, and other leaders of any level, many times what brought them down was a breach of trust. It may have brought down just the person, or the entire organization. Gallup's research shows that trust is the basis for employee engagement. Just 1 in 12 people will be engaged at work if they don't trust leadership; in contrast, 1 in 2 will be engaged if they DO trust leadership.

Trust also increases speed and efficiency at work. It skips over the formality and allows a team to get on with the work. If there is no trust, then you have to start at ground zero every time. Gallup's research shows that teams that are struggling often spend a disproportionate amount of time discussing trust, while successful teams never talk about it at all. Best Buy's Brad Anderson said that "trust is the most cherished and valuable commodity in a work environment." Relationships will trump competence in building trust every time.

Compassion – The Organization Must Have a Heart for People to Love It

Gallup found that people actually expect two different types of compassion, based on the role the leader has in their lives. They expect a global or organizational leader to have more positive energy output or "compassion" in an impersonal way, whereas they expect those who have daily influence in their lives to be "caring" on a more intimate level.

People who believe someone at work cares about them:

Are significantly more likely to stay with an organization

Have more engaged customers

Are substantially more productive

Produce more profitability for the organization

Standard Chartered's Mervyn Davies is a perfect example of this. He implemented several organizational-wide programs aimed at improving his employees' mental and physical well-being, and on a personal level encouraged his direct reports to put their families first. In return, he shared personal struggles he was having. Compassion, as are all four characteristics, is more effective in a give and take scenario.

Stability – The Key to Rapid Growth

Followers want someone they believe will provide a solid foundation for them, both financially and in their core values. People sometimes equate stability with lack of change but that's not accurate. You can completely renovate a building without ever touching the foundation upon which it rests. The same is true of an organization. At the most basic level, employees want to be assured of an income. An organization can change or evolve constantly as long as employees are sure they'll have a job to go to and a paycheck at the end of the day. According to the Gallup report, employees who are secure about their organization's financial future are nine times more likely to be engaged at work than those who have no faith.

One key element of stability is transparency. We hear this word all the time without ever considering the impact it has on an organization. Followers need to know where their career is headed and how the company is doing. One organization I worked with had a corporate meeting at the beginning of every year. In it, they discussed metrics ranging from a division's profitability to the goals for the upcoming year. If an employee didn't want to wait until the meetings, they were free to ask questions at any time. This was a key element in the stability and growth of the company.

Hope – If You Aren't Looking Forward, Chances Are No One Else Is Either

Creating hope appears to be the single most important thing leaders can do to engage their employees at work. Gallup's study showed that 69% of employees who were enthusiastic about the future of their company were engaged at work while only 1% of those who were not enthusiastic were engaged. You would think, based on this, that leaders would focus on creating hope for the future, but they don't. They focus on reacting to the demands of the day.

Leaders who react create a poor image for their followers. They give the impression of being out of control and unable to take charge. Leaders who initiate, on the other hand, create a feeling of power and eliminate the feeling of helplessness that often accompanies reactionary responses. Initiating is not an easy habit to put into place. Company cultures more often reward those who create solutions for what needs to be done rather than creating plans for what could be done.

It's also easier to be reactionary. You can set up small goals like meeting your daily sales budget or getting on your daily conference call on time rather than creating larger goals like creating a new product or proposing a market expansion plan. Becoming an initiator is one of the hardest habits to create. It's a lot of work; but it is also one of the most valuable efforts you can undertake to create organizational growth and hope.

Typically my blog entries are focused on marketing, but the idea of failure has been weighing heavily on me lately. Every time I turn around, it seems, there is some new quote about failure making an appearance. It came up not too long ago in the copy of “The Happiness Project” I’m reading. One of the tweeters I follow, @AllisonMaslon, posted something about failure. All these messages keep talking about how failure is the road to success. Two of the messages that resonated with me particularly are:

Courage is realizing that each failure merely brings you that one step closer to eventual success.

If you aren’t failing, you aren’t trying hard enough.

I read these and yet I can’t forget that in today’s culture failure carries a negative connotation – but primarily only with adults. Children are permitted failure, and the message given to them is clearly “Failure is expected and will lead to success.” As with every generality, there are exceptions: the abused child or the child expected to live up to someone else’s expectations, but we must remember – these are exceptions.

Think back to when you were small and learning something new. One of my experiences was learning to hit a baseball. I missed and missed and missed and yet there was always an adult there encouraging me with phrases like “No one gets it right the first time” or “Don’t worry, you’ll hit it the next time” or “Keep trying, everyone fails at first”. My dad, to paraphrase him, gave new meaning to the phrase “It’s not how many times you fall down that matters; it’s how many times you get up” when learning to ride a bicycle. The message is very clear – and the complete antithesis to the message delivered to adults in today’s culture. It is truer, I think, in the work environment than elsewhere.

When was the last time you made a mistake at work undertaking a new task and someone said, “I know this is the first time you’ve tried this, so just give it another go”? It’s more likely you walked away wondering what sort of negative impact your failure had on your boss’s perception of you. You may even have been reprimanded in some way for failing to get the new task right the first time.

As a general rule, people hustle and hustle and keep their heads down, hoping to just get by. Standing out is dangerous. Fear of failure is the stuff of mediocrity and an organization that implements a culture of fear is slitting its own throat. Empowerment to fail is the hallmark of a nonthreatening environment and an environment that recognizes the whole is greater than the sum of its parts.

I see this type of activity every day and I wonder how anything new is ever innovated in corporate environments. Entrepreneurial environments are completely different animals. You can’t compare the two. It’s a rare corporate environment that doesn’t have processes in place designed, intentionally or unintentionally, to keep people from proposing and implementing new ideas, processes or strategies.

If we return to the process of our childhood when failures were accepted and encouraged as something to get past, rather than something to be reprimanded for, how much more improvement and innovation would there be in companies? Suddenly the person who steps up and makes a suggestion for improvement is rewarded, even if the idea isn’t initially successful or practical for implementation. Even in that failure, that person has been a success because perhaps that person inspired the next person to step up and his/her idea IS successful and saves the company time or money.

Or how about looking at the reason for the failure? It is our nature to focus on weaknesses rather than strengths. We traditionally seek to compensate for perceived weaknesses rather than learning to excel using our strengths. Perhaps the failure is the result of a person with a talent for strategy and seeing the forest rather than the trees having found him/herself in a position where the need is for details and seeing the trees rather than the forest. Move that person to the right position and suddenly excellence and success is the norm for that person.

The road to success IS paved by failure, in many shapes and forms. Though society would like to enforce its definitions upon each individual, we need to remember that they are personal definitions and individual benchmarks. One person’s failure may be another’s success.

If you want to be a success, it takes courage – be willing to step up and fail.